‘Improper Use of Clean Energy Fund Weakening India’

India’s leveraging strength in climate finance will be “weakened” globally after the central government’s failure to properly plan state-wise sharing of revenue generated from the coal cess-driven National Clean Energy Fund (NCEF), an expert said.

According to Joyashree Roy, a member of the 2007 Nobel Peace Prize winning Intergovernmental Panel on Climate Change (IPCC), India is taking a “major wrong step” by not using the corpus (generated from carbon revenue) for decarbonisation.

“With only one step we could have had a fantastic global standing as an example of how we are using it. We need to be really intelligent on how to use this fund properly to make our global standing better and stronger. But I don’t think we are looking at that,” she said.

“We are seeing more national policies and ignoring sub-nationals. This revenue comes from states that are coal producers. The revenue should come back to these states but nothing of that sort is happening,” Roy told reporters Tuesday on the sidelines of an event organised by CII.

India is set to participate in the UN Climate Summit in New York later this month and in December its focus will be on the 20th session of the Conference of the Parties (CoP20) in Lima, Peru.

The NCEF was introduced by the previous UPA-2 government in the Union Budget 2010-11 to finance research and innovation in clean energy.

Based on the “polluter pays” principle for pollution management, a clean energy cess of Rs.50 per tonne was levied on coal produced in India. The cess, also applicable to imported coal, gets deposited in the NCEF.

The cess has now been increased to Rs.100 per tonne, in the current Union Budget.

According to reports, NCEF corpus has Rs.10,127 crore (as on March 2014) in its kitty and is expected to grow by another Rs.6,800 crore during 2014-15 post the doubling of the rate.

“The previous government was just sitting with the money and everybody was thinking how they could take some money. There was no transparency. Now, this government is saying it is going to give this money to Ganga Action Plan; this is ridiculous,” she said.

Roy said India’s lack of integration of Centre-state policies on the distribution of funds has cost the country a bargaining chip for global climate finance.

“When you do not do it sub-nationally, you are going to be pointed out globally that you are making a mistake.”

“It could have strengthened its position globally by doing a much better national and sub-national integration with right knowledge, but is a complete failure in that respect… so this will weaken their (India) position,” she said, adding: “States should start raising their voices.”

“It will also affect the Centre-state equation,” she pointed out.

Recently, Odisha, that has nearly 25 percent of the country’s coal reserves, urged the Centre to allocate adequate funds from the NCEF.

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